Don't port your health insurance policy just for the sake of lower premium

Within a few years of buying a health insurance policy, people often find that it has a number of shortcomings. They then wish to port to a policy that offers better features and add-ons. Sometimes people also port on account of a bad claim experience or a higher premium price. Insurers say that 8-18 per cent by value of the policy proposals they receive are for porting.

When a person applies for porting to a new company, it is quite possible that the latter may consider the proposal as unfavourable and decline the request. In that case, the policyholder will have to stick to his old insurer. "All porting proposals are vetted by the underwriting guidelines. Underwriting a policy involves evaluating risk exposure and determining the premium that needs to be charged. The underwriter can also reject any policy," says S Prakash, chief operating officer, Star Health and Allied Insurance.

Porting can only be done among similar types of health insurance policies. The features and benefits of the new policy are according to the new insurer, irrespective of what the old policy offered. Only the waiting period and the no-claim bonus are carried over to the new policy. "The waiting period for like-to-like covers reduces to the extent that it has been served in the old policy. For any incremental cover, the waiting period begins as in a new policy," says Biresh Giri, appointed actuary, Acko General Insurance.

While porting to a new policy, a policyholder can opt for the same sum insured as in the old policy, provided the new policy offers that sum insured option. The sum insured can also be enhanced, depending on the insurer. "Though you can enhance your sum insured while porting to the new policy, the porting benefits will apply only to the extent of the sum insured and the no-claim bonus of the previous insurer," says Sasikumar Adidamu, chief technical officer, Bajaj Allianz General Insurance. For instance, if you have a policy of, Rs 500,000 and while porting you want to enhance the sum insured to Rs 1 million, then porting benefits will apply only for Rs 500,000 and bonuses.

Don't port only for the lower premiums. "If you want to port for a lower premium, then make sure that your coverage does not reduce as this will be a loss to you. Similarly, if you are going for a higher sum assured, then keep in mind that you will have to serve the waiting period for the increased sum assured value," says Naval Goel, chief executive officer, PolicyX.com.

Policyholders can face a few issues while porting. The premium of the new policy could be higher on account of added benefits. You also have to watch out against losing significant benefits in the new policy. Experts say insurers don't usually allow portability if the policyholder is in the higher age group or in poor health. Even if they accept such proposals, it is with a number of clauses and restrictions. Policyholders having a pre-existing disease that requires frequent hospitalisation are more likely to be rejected.

Porting is allowed only at the time of renewal of policy. Apply for porting at least 45 days before the expiry of your existing policy. The new insurer also needs to inform you of its decision within the renewal grace-period of your existing policy. "During your grace period, if you meet with an accident your existing insurer will not provide the cover to you as you haven’t renewed your policy with it. But the insurer that you are porting to is bound to cover you during that period if it hasn’t declined you by then," says Vaidyanathan Ramani, head-product and PolicyBazaar.